By and large, HOA (home owners’ association) fees only apply to types of residential properties which share a large common area with other similar properties. In other words, they mostly target condominiums, townhouses, or other homes in planned developments (gated communities, leased land properties, etc.). However, they can also apply to regular subdivisions in single family home communities. What’s more, since they are governed by individuals who live in your immediate vicinity, HOA rules can often be more strictly enforced than the city ordinances or restrictions that affect the area where you live.
The HOA gets to decide in any number of matters that directly affect you and your home, which is why you should be aware of their rules long before you buy. They can dictate the size and type of pet permissible in the community, whether or not large cars (think RVs) can be parked in the driveway or street, if satellite dishes or front window coverings are allowed, what color door or home exterior is allowed, and so on. For all these reasons, and a few more, which we discuss right below, you need to know all about your potential future HOA, their policies, fees, and fines, when considering a property governed by such an organization.
What does your HOA fee cover?
Typically, the HOA fees will range from $200 to $400 per month, with a tendency for the upper echelon for more upscale buildings or communities. The more facilities on the premises (think pools, gyms, tennis courts, fancy landscaping, elevators, garages, and more), the higher the HOA dues will be. That’s because the HOA guarantees to handle all those expenses on behalf of the owners and maintain the quality of living in that particular building or community. The more complex and high maintenance those areas are, the more expensive it will be to live there. Aside from these fees, should the homeowners association run out of reserves when they need to handle a major expense, like roof or elevator repairs, they will likely order a costly evaluation, which will incur further costs on the part of the owners.
Find out all about HOA fees, rules, and fines before you buy
It’s important to do your homework about a particular HOA before purchasing a condo, because you can often uncover aspects that you dislike. Homeowners’ associations can be over-managed (power trips, frequent conflicts, unreasonable Covenants, Conditions & Restrictions) or under-managed (residents simply volunteer to run the HOA, but no one really takes care of maintenance, repairs, and other things your fees would be paying for, in theory). All in all, HOA fees can make all the difference in terms of affordability. They can even be the deal-breaker that makes you reconsider buying that house you previously didn’t think was worth it. So kindly look into all these things before settling in with any homeowners’ association:
- What are the HOA’s policies on fines? Some HOAs even reserve the right to foreclose on your home, should you incur massive HOA fee debt.
- How often do these policies change? How transparent is the HOA in question? Ideally, you should be able to attend HOA meetings and take part in the decision-making process, should you choose to become thus involved.
- Does your home comply with CC&R rules? If it doesn’t, asking for variance from the HOA is unlikely to succeed, so your best bet is to figure out how much it would cost you to deal with those non-compliances.
- How does this particular HOA match up with others in the area, in terms of fees? Bear in mind that economies of scale dictate that smaller HOAs might incur larger costs, especially when it comes to extra assessments (as the costs divide by a smaller number of owners). If you’re paying for many facilities, make sure you’ll actually be able to use them, i.e. if those pool or gym hours work for you. Also, check to see what the HOA’s policies are on guests to those facilities, since some don’t allow them.
- What’s the HOA’s fee track record? How have those fees fared historically? How often are they increased and when was the last time they did? Are there any extra assessments planned in the near future? What exactly will you be paying for? Are services like cable and garbage pick-up included or not? Can you see a record of HOA fees for the past decade? How large is the reserve? Legislation on access to these records, as well as to the balance sheet and yearly revenue of the HOA will vary from one state to the next, but, by and large, it should be easily accessible to you, as a potential buyer.